For the last 10 years, we have had a booming global economy. Currently, we have a global panic and this economic growth looks as if it is coming to an end. The party is finally over! Globally, we are facing a very big economic downturn and we have reached to a point where everything has begun falling apart. The economy has come to an abrupt halt as supply chains break and anxiety spread all over. Millions of businesses have been impacted by the supply chains disruptions and this has triggered the biggest economic meltdown since the 2008 global financial crisis.
For the last two weeks the US stock market has been tanking all across the board. It looks as if a major stock market crash is upon the United States. The Dow Jones Industrial Average has been swinging approximately for 1,000 points in multiple days within the last two weeks. The stock market traders have been panicking because the market has just turned out to be a rollercoaster that they have not seen for many years. The market has been very volatile with up to 4.5 percent movements in a day and all investors are unaware of what will happen next. There is a lot of panic as investors fear that the market will continue tanking because economic indicators are indicating that a big stock market crash will happen. The recent interest rate cut by the Federal Reserve has not done any good to the market.
The financial markets are having the worst performance since the 2008 financial crisis. The S&P has the worst performance in a decade and now it is already down 5 percent. The Europe 600 index has dropped by 5.9 percent while the MSCI Asia Pacific Index sank by 4.1 percent. This is even worse than the 2010 flash crash because we never had such a big drop and the question is what will happen next to the stock market. Will we see a bounce or will the markets continue plummeting.
The US economy has been slowing down and economists are predicting that a major economic collapse is coming. In a recent interview, Guggenheim’s Global CIO Scott Minerd said that the cognitive dissonance in the stock market is stunning as reflected by the ever rising prices and credit spreads. He expressed that this is not a buy the dip market but don’t try to catch a falling knife markets because prices have been plummeting for weeks. The stock market collapse has already begun!
Will the Chinese economic collapse happen in 2020? China is the second largest economy in the world and in the last two decades, China has experienced a significant economic growth. However, the China has many problems like enormous debts, bank runs, an aging population and many others. The growth in China has been fuelled by debts and poor policies and this has created a hyper bubble that will burst with a china’s yuan crash. People are always asking when the economic collapse will happen in China. For the last several years, we have seen several Chinese banks being shut down. Banks like Baoshang, Jinzhou and other banks have been shut within a very short time. These are some of the cases of bank collapse in China and economists are predicting more similar cases in days to come.
Ever since the last stock market crash, unprecedented intervention by the us Government’s Bank has helped the financial system relatively stable. No matter what happened the Fed always solved the problem but they created the biggest stock market bubble in U.S history. Now they facing with the biggest challenge and it looks like they can do nothing to avoid the next financial crisis. They try to solve the problem with the same old way that worked well in the past and on Tuesday they announced an emergency rate cut and instead of rising the stock market started to crash.
Germany is the largest economy in Europe and it has been very pivotal to the success of the European Union. However, the German economic situation is taking a new shape as data being released is showing slowdown. The economy has been flopping for months and the manufacturing sector has been declining steadily and a big recession might be around the corner. According to the economists, the German economy has been faltering and the current instability in the global markets is just adding more owes to the economy.
Sometimes back, taking a vacation to Venezuela was one of the best things one could do. It is a surprise that such a thriving nation which everyone desired to be associated with has been brought down to its knees within a very short span of time. The truth is if the wrong combination of economic events line up, even the greatest nation on earth can be brought down overnight leading to an economic collapse and chaos among the people.
By looking at the cascade of events that lead to the collapse of the once thriving Venezuelan government and economy, we can see the events that lead to the collapse and rectify our course before the same happens to our nation. Lessons from the collapse of Venezuela can make things easier for us when it comes to understanding the prevailing economic situation and how much time we have before we experience a similar disaster in the United States.